For Online E-newspaper
The East African : July 21st 2014
The EastAfrican BUSINESS JULY 19-25,2014 ILLEGAL TRADE Dar moves to curb sugar smuggling The gove≥nment plans to establish a conso≥tium to impo≥t suga≥ in bulk By ROSEMARY MIRONDO Special Correspondent tation in order to address domestic shortages. Agriculture, Food Security and T Co-operative Minister Christopher Chiza said covering deficits through merchants usually leads to excess imports and low prices that hurt local factories. “We want to import in bulk be- cause when we allow business people to import to plug a deficit, they import too much,” said Mr Chisa. He said the Sugar Industry Regu- lations would be amended to allow importation of sugar by special bid as it is done in the oil sector. The amendments are expected to be tabled before the Council of Ministers in October. Mr Chiza said illegal imports from Malawi are denying the government revenues and lock out local producers. Sugar smuggled into the country is sold at between $1.05 and $1.17 compared with local sugar that is sold at between $1.17 and $1.35 a kilogramme. “The new regulations will strengthen the ban on illegal sugar imports by ensuring traders that use our ports when importing sugar do not illegally sell it in the Tanzanian market while it is on transit,” Sugar Board of Tanzania director general Henry Semwaza said. Bulk sugar, however, cannot be imported without a permit from the East African Community, which has set an external tariff of 75 per cent for sugar entering the Common Market. During deficits, member countries — Kenya, Uganda, Rwanda and Burundi — are allowed to import the commodity duty free. RED FLAG Imported sugar on transit. Picture: File Mr Chisa said a technical Com- mittee would recommend issuing of permits to importers and introduce a tax regime aligned with the cost of producing sugar. Tanzania produces about half of the 590,000 tonnes of sugar it consumes per year. Mr Semwaza said a consorti- um of local sugar producers and traders would be established for the bulk imports, which are expected to start from July next year. The amended regulations will provide for establishment of a company, its management and the financing mechanism of the importation. Mr Semweza said discussions are going on between stakeholders who 590,000 By STEVE MBOGO Special Correspondent A NEW $250 million fund has been announced to be given in grants and interest-free loans to businesses across East Africa. Businesses that qualify in a competition to provide renewable energy solutions in rural areas and enable small-scale farmers to adapt to climate change through projects like irrigation and widening financing opportunities for small businesses in the region, will benefit. The $250 million fund managed by KPMG and fundraised under the umbrella of Alliance for a Green Revolution in Africa (Agra) was announced by the Africa Enterprise Challenge Fund (AECF). Priority will be given to businesses that can match the grant applied for, usually a minimum of $250,000 to $1.5 million. The matching does not necessarily have to be in capital commitment but also in kind. Solar panels. Picture: File will take part in the arrangement. “The company will only be im- porting sugar once or twice annually when local producers are on a break. This will control smuggling of sugar into the country and protecting the local market,” he said. The consortium will regulate the sugar supply chain in the country and rein in businessmen who stockpile sugar to cause an artificial shortage. Local production During the 2013/2014 season, a total of 308,000 tonnes of sugar was produced. However, there is at least 80,000 tonnes of sugar that is still in reserve, which means Tanzania has enough sugar to last until the next season of production. Generally, the supply of sugar Amount of sugar in tonnes that is consumed in Tanzania for households and industrial use in the country is 590,000 tonnes per year. Tanzania Sugar Producers As- In April this year, the four sugar producing factories in Tanzania had at least 62,800 tonnes of sugar that they could not sell because the market was saturated with illegal imports while their distributors had another 11,000 tonnes. It was understood that approximately 100,000 tonnes of sugar had entered the market despite the country banning shipping of the commodity from January. Despite the massive sugar imports, the price of sugar remained relatively high selling at between Tsh2,000 ($1.2) and Tsh2,500 ($1.6) per kilo as opposed to the government’s hopes of lowering the prices to between Tsh1,600 ($.0.98) and Tsh1,700 ($1.02). sociation executive secretary Deo Lyatto said illegally imported sugar is a threat to local producers, because it is cheap. $250m fund to boost businesses in the ≥egion But businesses that commit to match the fund with an equivalent cash injection will be given higher scores. “Matching is impor- tant because the business must share the risk with the fund. The fund money being soft money makes it easier for the qualifying business to easily get further funding from the banks as the banks will be willing to chip in,” said Hugh Scott, the director of AECF. The fund offers an opportunity for small businesses with innovative ideas to gain from soft financing at a time when interest rates charged by commercial banks in the region are high. “The key issue here is to fund agribusiness and renewable energy projects,” said Mr Scott. Businesses have a window of two months, from July 15, to apply for the funding through the AECF website. The fund will guide the qualified companies in implementing their proposals. Cash injection will be made in the first three years while the repayment will be done in the following three years, completing a cycle of a six-year contract period. Anjali Saini, the window manager of the fund, said the available fund will be invested in at least 25 companies with the best business ideas that will lead to growth in the rural economies of East Africa. “In order to qualify, the business ideas must demonstrate a positive impact on the rural poor, deliver increased employment and income opportunities, reduce costs and improve productivity,” she said. anzania is revising sugar import rules to allow bulk impor- 43 $122m g≥ant to suppo≥t education By CHRISTOPHER KIDANKA The EastAfrican The World Bank has given the Big Results Now Initiative $122 million in grants to improve the quality of education in primary and secondary schools in Tanzania. The World Bank executive di- rectors also approved further support to the ongoing science and technology higher education project, which aims to produce a highly skilled workforce to fasttrack economy growth. The Tanzanian education sys- tem has been facing challenges in recent years including inadequate budget and lack of science laboratories in secondary schools. According to a statement re- leased by the World Bank and the new programme-for-result lending instrument, the money will be released in bits in four years. “The World Bank is delighted to support programmes that invest smartly in education, because skilled and talented young people are going to be Tanzania’s wealth as the economy grows, diversifies, and moves from low-income to middle-income status,” said Philippe Dongie, the World Bank country director for Tanzania, Arun Joshi, World Bank educa- tion specialist, said the grant is a direct intervention in the challenges facing Tanzania’s education syestem. Decline in quality There has been an outcry from Members of Parliament, civil society organisations and the general public about the declining quality of education in Tanzania. Giving details of the pre-agreed results that will attract further funds disbursement, the World Bank said the results include deployment of teachers equitably across the country, getting capitation grants to schools on time, gathering data and monitoring results. The programme also aims at motivating teachers to spend more time in classrooms with students. Tanzania will also receive an additional $15 million credit for the science and technology and higher education project to increase the number of graduates with relevant skills in order to address the shortage of qualified science teachers in secondary schools. “This project will strengthen the linkage between higher education and industry, and develop a roadmap for skills development in priority growth sectors,” said Mr Joshi. According to recently released World Bank statistics, every year an average of 800,000 people enter Tanzania’s labour market but the majority dont have the kills sought by employers.
July 14th 2014
July 28th 2014